Bitcoin Cash’s rally faces KEY test – Can BCH hold above $500?

Over the past day, Bitcoin Cash [BCH] posted a strong performance, rising as much as 20% and reaching an intraday high of $544 at the time of writing.

The move reflects a combination of rising on-chain usage and growing bullish conviction among futures traders in the BCH perpetuals market.

On-chain activity signals rising network usage

On-chain data points to a notable increase in network usage, highlighting renewed liquidity flows across the BCH blockchain. Over the past week, transaction activity rose sharply, indicating stronger participation from market participants.

Between the 1st and 17th of February, the number of BCH transactions increased from 9,769 to 14,240. This represents an additional 4,471 transactions over the period, marking a clear rise in on-chain engagement.

The average transaction value over the past 24 hours stood at $8,411. This level suggests that a significant portion of recent activity may be linked to large holders, commonly referred to as whales.

While direct confirmation of whale accumulation remains unavailable, the total value of BCH transferred during this period reached $119.76 million. This figure accounts for roughly 1.16% of the asset’s total market capitalization, indicating that substantial on-chain liquidity has moved.

Futures market shows a strong long bias

Speculative positioning in the derivatives market continues to support the ongoing rally. Futures traders have increased bullish exposure, with a majority of capital concentrated in long positions.

Data from CoinGlass shows that the OI-Weighted Funding Rate has turned positive at press time. This metric measures where Open Interest (OI) is concentrated relative to funding costs and is commonly used to assess directional bias in futures markets.

A positive reading indicates that long positions dominate OI, increasing the likelihood of price continuation in that direction. Given current market momentum, this positioning reinforces upside pressure.

Liquidation data further highlights the imbalance between longs and shorts. Over the same period, short liquidations significantly exceeded long liquidations. Long liquidations totaled $102,340, while short liquidations reached approximately $1.5 million, nearly ten times higher.

As the gap between short and long liquidations widens, market conditions continue to favor bullish positioning, provided overall momentum remains intact.

Hashrate decline raises network concerns

Despite supportive on-chain and derivatives data, BCH’s declining hashrate presents a potential risk. Hashrate measures the total computational power securing a proof-of-work network such as Bitcoin Cash.

A decline in hashrate indicates reduced mining activity, often driven by lower profitability or operational constraints. Fewer miners or reduced computing power can weaken network security in the short term.

In this case, the decline appears temporary unless price weakness forces miners to sell holdings to cover costs. However, sustained hashrate pressure could undermine confidence if it persists.

Spot market behavior introduces an additional headwind. Data shows a rise in selling activity, with total spot sell-offs reaching $1.1 million over the past day.

If selling pressure continues to build, it could limit further upside and dampen overall price performance, even as derivatives traders remain positioned for higher prices.

Final Thoughts

• BCH has recorded a sharp increase in on-chain activity, strengthening overall market participation.
• At the same time, speculative positioning has tilted in favor of a continued rally.